MIDLAND PARK, NJ--(Marketwired - February 24, 2016) - Stewardship Financial Corporation (NASDAQ: SSFN), parent company of Atlantic Stewardship Bank, today announced results for the fourth quarter and full year ended December 31, 2015. For the three months ended December 31, 2015, the Corporation reported net income available to common shareholders of $1.1 million, or $0.17 per diluted common share, compared to $1.1 million, or $0.19 per diluted common share, for the three months ended December 31, 2014. Net income available to common shareholders for the year ended December 31, 2015 of $3.7 million, or $0.62 per diluted common share, represented a significant increase over the $2.4 million, or $0.40 per diluted common share, earned for the year ended December 31, 2014.

Discussing the results, Paul Van Ostenbridge, Stewardship Financial Corporation's President and Chief Executive Officer, commented, "Earnings reflect the impact of our loan growth and focus on noninterest income, while maintaining expense control. For 2015, we achieved 10.3% of growth in our loan portfolio and a 6.6% increase in fees and service charges while keeping expenses relatively flat."

Balance Sheet / Financial Condition

Total assets of $717.9 million at December 31, 2015 reflected an increase when compared to $693.6 million of assets at December 31, 2014. Since December 31, 2014, a $49.2 million increase in gross loans receivable was the result of new loan originations net of normal principal amortization and payoffs. In terms of total assets, the loan growth was partially offset by the previously reported sale of approximately $27.8 million of available for sale securities with higher price volatility. These sales provided a portion of the funding needed for the loan growth as well as a purposeful shift into higher yielding assets.

Deposit balances totaled $604.8 million at December 31, 2015 compared to $556.5 million a year earlier reflecting $48.3 million, or 8.7%, of growth. Van Ostenbridge noted, "This increase in deposits was important in our ability to cost effectively fund the growth we experienced in our loan portfolio." In addition, as a result of an increase in deposits, other borrowings decreased $26.7 million to $40.0 million at December 31, 2015.

The increase in subordinated debentures and subordinated notes reflects the previously announced completion of a $16.6 million issuance of fixed rate subordinated notes on August 28, 2015. The subordinated notes have a maturity date of August 28, 2025 and bear interest at the rate of 6.75% per annum. Using the net proceeds of the subordinated note issuance, on September 1, 2015, the Corporation repurchased the $15.0 million of preferred stock, thus ending the Corporation's participation in the U.S. Department of the Treasury's Small Business Lending Fund program ("SBLF").

While tier 1 capital was impacted by the replacement of preferred stock with subordinated debt, which is considered tier 2 capital, regulatory capital levels continued to exceed the capital requirements for a "well capitalized" institution. At December 31, 2015, the Corporation reported a tier 1 leverage ratio of 7.67% (4% requirement) and total risk based capital ratio of 14.34% (8% requirement).

Operating Results

Net interest income of $5.4 million and $21.8 million was reported for the three months and year ended December 31, 2015, respectively, compared to $5.8 million and $21.7 million for the same periods in 2014. The net interest margin for the current three months and year ended December 31, 2015 was 3.18% and 3.30%, respectively, compared to 3.57% and 3.46% for the three months and year ended December 31, 2014, respectively. The reduction in net interest rate margin partially reflects the impact of the $16.6 million of subordinated notes previously discussed. While the cost of the subordinated notes adds to interest expense, on an after tax basis, such increase is approximately offset by the dividends that would have accrued at a rate of 4.56% on the preferred stock resulting in an overall neutral effect on net income available to common shareholders. Furthermore, beginning on March 1, 2016, and for all dividend periods thereafter, the dividend rate on the preferred stock would have been increased and fixed at 9%, making the issuance of the subordinated notes a positive impact to net income available to common shareholders in the future.

For the three months ended December 31, 2015, the Corporation reported noninterest income of $855,000 compared to $990,000 for the equivalent prior year period. Noninterest income for the year ended December 31, 2015 was $3.5 million compared to $3.0 million for 2014. On a year-over-year basis, fees and service charges reflect an increase of $132,000. In addition, the current year gains on sales of mortgage loans of $141,000 represented a nearly 50% increase over 2014. Finally, the year ended December 31, 2014 included a loss of $241,000 from the sale of nonperforming loans.

Noninterest expenses for the three months and year ended December 31, 2015 totaled $4.9 million and $20.2 million, relatively consistent with the $5.0 million and $20.2 million incurred for the comparable prior year periods.

Asset Quality

"We believe the stabilization of our nonperforming assets has been clearly demonstrated," stated Van Ostenbridge. For the three months and year ended December 31, 2015, results continue to be positively impacted by the Corporation recording negative provisions for loan losses of $275,000 and $1.4 million, respectively. For the prior year, the Corporation recorded negative provisions of $300,000 and $50,000 for the three months and year ended December 31, 2014. The allowance for loan losses represented 1.68% of total gross loans compared to 2.01% at December 31, 2014. The recording of negative provisions for loan losses and the decline in the allowance coverage ratio are directly attributable to improved credit quality metrics of the portfolio and the reduction in the estimated level of allowance for loan losses required. Nonperforming loans were $1.9 million, or 0.36% of total loans at December 31, 2015 compared to $3.6 million, or 0.76%, at December 31, 2014. Total nonperforming assets of $2.8 million, which includes other real estate owned, represented 0.38% of total assets at December 31, 2015 compared to 0.71% at December 31, 2014.

About Stewardship Financial Corporation

Stewardship Financial Corporation's subsidiary, Atlantic Stewardship Bank, has 12 banking offices in Midland Park, Hawthorne (2), Montville, North Haledon, Pequannock, Ridgewood, Waldwick, Wayne (2), Westwood and Wyckoff, New Jersey. The Bank is known for tithing 10% of its pre-tax profits to Christian and local charities. To date, the Bank's tithe donations total $8.6 million.

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The information disclosed in this document contains certain "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as "believe," "expect," "anticipate," "should," "plan," "estimate," and "potential." Examples of forward looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of the Corporation that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include: changes in general, economic and market conditions, legislative and regulatory conditions, or the development of an interest rate environment that adversely affects the Corporation's interest rate spread or other income anticipated from operations and investments.